Why the end of $60 video games is near

Cuban Warlord

There's a war going on in the video game world, but it's over dollar signs, not virtual land. A boxed copy of Call of Duty: Modern Warfare 3, the world's top-selling console game, costs $60. Angry Birds, the world's biggest mobile game franchise, costs $1 for software that you can download in under a minute. The pricing gap between what's traditionally considered the highest-tier premium games and the fast-evolving mobile, tablet, and social gaming market is widening, and it's spelling disaster for countless game makers caught in the middle.

According to The NPD Group, physical content sales were down 8% in 2011. This year hasn't been a cakewalk either, with sales continuing to slide. Though some of the blame can rightfully be foisted upon the decline of the once-mighty Wii, it's apparent that people aren't buying games like they used to, and the industry is scrambling to figure out why. But most agree that it begins — and likely ends — with the high cost of new games.

The sentiment that games cost too much is certainly not new. Wired's Chris Kohler recently outlined a list of reasons games cost too much and combated the argument that the used game market can be blamed. Nexon America's CEO Daniel Kim told GamesIndustry International that "Free-to-Play" games (often called "Freemium" because users are incentivized to pay small premiums for more content) are not going away and the traditional model will have to change.

He's right. $60 has always been an embarrassing, crippling barrier of entry compared to gaming's entertainment peers. A brand new book, DVD, or CD rarely breaks the $20 mark, and even the highest tier Blu-rays cap out at around $30. Why are new games so pricey?

Publishers have long blamed console games' high price on a plethora of issues. Skyrocketing development costs is a biggie, as is piracy. Most recently, publishers are taking aim at the used game market, charging that the buying and selling of used merchandise is taking cash out of their pockets. But whatever impact on profitability these concerns have, it doesn't change two monumental problems:

- Psychologically, $60 just sounds expensive. This isn't anecdotal, this is common sense. Unless you're financially independent, $60 outright repels a vast slice of the entertainment consumer populace that the games industry desperately needs to convert to grow and survive.

- People are having fun playing more affordable games. The choice and product quality at the bottom end of the pricing scale -- anything under $15 or so -- has grown tremendously in a relatively short period of time. Games like Draw Something, Angry Birds, and Infinity Blade aren't only played by 'casual' gamers. That being said, the top perennial franchises like Halo, Elder Scrolls, Battlefield, and Madden aren't going anywhere, at least for a while longer. Games that critics and consumers universally laud as "must-haves" can continue to support this massive premium. But it's the mid-tier titles, the unestablished IPs, the riskier endeavors, the worthwhile games that don't quite master the magic formula, that will never get off the ground. Even highly-praised franchise entries like Rayman Origins struggle, and publishers like THQ have been threatened with NASDAQ delisting despite enjoying sales that "exceed expectations." Black Rock, creators of critical darlings Pure and Split/Second, were denied sequels by publisher Disney to focus on freemium content and eventually shuttered entirely.

The most egregious example of old-school thinking is the release of Plants vs. Zombies on PlayStation Vita. One of the rarer "crossover" successes, the game costs $3 on the iPhone but a whopping $15 on the Vita for an identical product. Why? Because it's a dedicated gaming device and core gamers are accustomed to paying higher premiums. How long can this madness last?

It's not just Facebook and smartphones that threaten to steal that audience. The consoles themselves have thriving online stores in Xbox Live Arcade and PlayStation Network, offering gaming alternatives with high production value and more relaxed pricing. Just look to successes like Battlefield 1943 (over 1MM units sold), Xbox's Castle Crashers (sold 2.6 million), and recent PS3 hit Journey, which quickly became the PSN's fastest-selling title ever.

If the Old Guard would just drop the charade that $60 is the only feasible price point, they might find an unexpectedly higher volume of purchasers to mitigate the reduced revenue per gamer. I realize that the $60 Call of Duty costs some tens of millions more to develop, market, and distribute than the $1 Angry Birds, but is there really a $59 differential there? Someone wiser than me in economics can surely model up a theory that finds a middle ground.

I've recently read too that the future systems will block you from playing used games. On top of that games now a days have expensive dlc so you're really not paying just $60 but well over that.

So with all this in mind where do you think the future prices of video games will be at? Will we see an increase or a decrease in price?

Waste

I will stop buying if they actually block used games.There's not really much more I can say about it honestly.I'm not a huge console fan anyways so it won't hurt me to go back to PC and be just fine.This also prevents borrowing as well.

Xcommunicated

it's apparent that people aren't buying games like they used to, and the industry is scrambling to figure out why.

Well, certainly it couldn't have anything to do with developers taking shortcuts by rehashing the same damn game year after year. And it definitely couldn't be that the current generation of tech has started to stagnate and impede innovation. Wait, no that's it.

/captain buttf*ck obvious

Personally, I think there's no way the market will sustain a higher price point in the next gen. And if it so happens that it can't even sustain at $60 due to greater competition form other areas which in turn cuts back the number of supposed triple A titles getting the green light, so be it. Few triple A's live up to the hype and deliver at their premium price point anyways.

And if these clowns don't learn to stop bitching and moaning about the used game market and piracy, they're just going to further alienate the consumer and lose more customers. Blaming the consumer instead of their own lack of innovation and attention to what people want is bad business.

Moth

No they haven't. The rise of $60 PC games only came out recently. Console games have been more expensive do to stuff like cartridges and console licensing fees. Unless you are talking about MMOs, which are a whole different bag of worms.

MHH

Well if the new gen consoles (PS4 and Xbox 720) move to digital distribution then I would certainly expect a serious price drop. Then you'd have to a cloud system so they wouldn't have to get TB HDD out there as well.This is just based off rumors and theory that the new gen might go that route instead of physical media.Since they also use the excuse of actual manufacturing costs contribute to the $60 price tag that should drop it down right from the start. I do think that the article is right though if blu rays that are cream of the crop for content can be half the price of games then they certainly can get the markets video game pricing back in line.

I also seems that nintendo might just get f*cked by haphazardly designing and rolling out the Wii U here ahead of Sony and Microsoft. Because if they designed something based around a physical disk (which they have) and the other two companies go with digital distribution that might shoot their whole 'Causal Gamer' right in the foot. Think about a $30-40 Skyrim, Battlefield, COD, Uncharted titles vs. a $50 or plus Wii U title they just shoot themselves in the foot for the market they want to go with.Obviously the people who get zelda, mario, metroid would still buy though but not the targeted people nintendo built the Wii around.

Tl:Dr: The end of $60 console titles will come when they go digital otherwise I can't see it happening without a collapse of the gaming market due to people not getting any or minimal titles.

Slamman

One report here says that game prices for Next Gen online will go up, but also a clamp down on the used market.Your idea probably plays into an online model where prices are reduced and shipping, distribution and packaging supposed cost of physical media is cut out or downThe other end is that you used to save $10 off the $60, or more when you buy the same game for PC, but I do see them listing for $60, so it's not so true as it stands presently.

I disagree with Xcomm, Consoles aren't holding things back as much as is perceived, since I've always felt it's been proved that the more the hardware is left to mature, the more the software can arise to the challenge. How can you say otherwise??At some point, it's true, but not entirely a given

Biggus

$60 PC games? In Australia, right now on Steam, MW3 is $99.99. The current exchange rate is $1AUD = $1.03ish US, which means that if I were to buy MW3, I'd be paying $103.31 US dollars. I see console games in shops for $110. New release PC games have hovered between $80 and $100 for a good decade or more here.

Finn 7 five 11

$60 PC games? In Australia, right now on Steam, MW3 is $99.99. The current exchange rate is $1AUD = $1.03ish US, which means that if I were to buy MW3, I'd be paying $103.31 US dollars. I see console games in shops for $110. New release PC games have hovered between $80 and $100 for a good decade or more here.

Digital distribution will do nothing to make games cheaper.

MW3 was $130 for PS3 and 360 to start off with, yes i know Aussie games are far more expensive here, but it kind of works out to be a similar price as wages and such here are a little higher to compensate for more expensive things, they charge more here because we are willing to pay more.

Increasing game prices will kill/choke the industry, DLC already makes games a lot more expensive, even myself i have enough money to comfortably buy new games when i want them but i have refrained myself from purchasing some of the DLC ridden titles that have come out lately because it's a waste of money, i won't get my entertainments worth, sure i could get MW3 but why? I have played it and it gives me nothing more than Black Ops does.

Biggus

MW3 was $130 for PS3 and 360 to start off with, yes i know Aussie games are far more expensive here, but it kind of works out to be a similar price as wages and such here are a little higher to compensate for more expensive things, they charge more here because we are willing to pay more.

Increasing game prices will kill/choke the industry, DLC already makes games a lot more expensive, even myself i have enough money to comfortably buy new games when i want them but i have refrained myself from purchasing some of the DLC ridden titles that have come out lately because it's a waste of money, i won't get my entertainments worth, sure i could get MW3 but why? I have played it and it gives me nothing more than Black Ops does.

That's not necessarily true. Average personal income isn't that different between the US and Australia. In fact, in 2004-2005, they were very close to being equal, factoring in the exchange rate.

It's price gouging. There is no justification for charging double the price.

No they haven't. The rise of $60 PC games only came out recently. Console games have been more expensive do to stuff like cartridges and console licensing fees. Unless you are talking about MMOs, which are a whole different bag of worms.

What are you smoking? The newer pc games are quite costly, there are some older games that you could be but for less that $30 - $60 retail no Steam version. However, as Biggus said in Australia we usually get ripped off by everything.

Finn 7 five 11

You know i was thinking on 'no used games on next gen consoles'.I doubt consoles themselves will block the use of used games, for Sony and M$ it won't benefit them a whole lot.If used games are coming to an end i think it will be down to the developers/publishers forcing people to have online passes.

I have a couple of ways i just thought of that Developers/publishers can implement to minimize losses on used games. (Which i think aren't as big as they say they are, im sure many people buy a cheap used game and get hooked on the series then pre-order the sequel which they never would have had they never picked something up from the bargain bin).Nevertheless here are my ideas.

1. I am under the impression Digital distribution is cheaper and more profitable than physical yes? If that is the case developers/publishers should offer the digital download for less to attract more customers, this will be more profitable in that there will no used games since digital games cannot be resold.

2. If you buy a used game you can purchase an online pass (If devs/pubs go that way) for a small fee like $10 or something, that way the devs/pubs are still making money on used games.

I don't understand why they don't try step 1, if they rip people off digitally there isn't a hell of a lot of reason to go digital when you can get the same thing physically and then re-sell it later so basically it works out cheaper.I would much rather get a second hand copy for half the price physically than a full price digital any day of the week.If a digital were to be 75% of in store prices then for convenience sake i would be more likely to purchase the digital.

El Zilcho

There are quite a few good points in that article. I find I'm losing interest in gaming more and more, with simple, fun games like GTA keeping me there. Call of Duty is consistently turning me off and the bleeding dry tactics of CoD: Elite have just made me lose interest even more. I bought MW3 but barely played it, this has made me seriously reconsider if I'll buy Black Ops 2. So I suppose I'm a real life example of dissatisfaction at the rising prices, corporatism (not that that's new) and DLC sh*t.

Biggus

I don't understand why they don't try step 1, if they rip people off digitally there isn't a hell of a lot of reason to go digital when you can get the same thing physically and then re-sell it later so basically it works out cheaper.I would much rather get a second hand copy for half the price physically than a full price digital any day of the week.If a digital were to be 75% of in store prices then for convenience sake i would be more likely to purchase the digital.

Just to clarify, when I bought Skyrim on GMG, that was a digital download. Why does the UK get games for 40% less than Australia, even with digital distribution?

I don't understand why they don't try step 1, if they rip people off digitally there isn't a hell of a lot of reason to go digital when you can get the same thing physically and then re-sell it later so basically it works out cheaper.I would much rather get a second hand copy for half the price physically than a full price digital any day of the week.If a digital were to be 75% of in store prices then for convenience sake i would be more likely to purchase the digital.

Just to clarify, when I bought Skyrim on GMG, that was a digital download. Why does the UK get games for 40% less than Australia, even with digital distribution?

I am sorry, i see your point already, i simply failed to acknowledge it in my second post.Yes it is BS that we pay more.Please note though everything here is more expensive, not just video games, we live in a small population so they are going to milk us for all we've got, that's just how it is, and if game prices increase overseas they will also increase here even more even though they are already ripping us off.

I did read the article you linked as well.

Biggus i recommend you this site - http://www.ozgameshop.com/SOmeone here on the forums showed it to me and i have used it ever since, the prices are the same as the Average UK person would pay and shipping is free and it is all in Australian dollars.MW3 brand new was only $64 AUD.

4 Bagger

I buy most of my games used unless they require an online pass, the case is scuffed or if the game has just come out, then I will buy it new. Games brand new can vary from £35 - £45 over in the UK and can normally get a used game for about 25% cheaper once it has aged a bit.

acmilano

I bought new Mass Effect 3 for 125 KM in Bosnia,which is some 63 Euros,and never thinking to buz extra DLC for 10 more euros or some app for system i dont even own,or pay for Xbox Live,so i never got a 'good' ending that can be only unlocked by those additional crap.Hell its lot of money,so everybody will have to think about their prioritiesnot need everything on market.

kudoboi

the retail games here are around 60SGD(48USD) standard for PC and usually 70SGD+(56USD+) for consoleson steam im guessing games price here are international eg: mw3/max payne 3 is 59 USD while norm games are from 39 to 49 USD and indie/smaller/older games are from 9 to 29 USD.. tbh id rather pay a little extra just for steam achivements etc